For years, entrepreneurs and small businesses have had essentially two choices for keeping their books; using an old fashioned ledger or using a computer software program such as QuickBooks, often with the assistance of a local accounting firm. Today, there is a new option that is gaining steam called cloud-based mobile apps.

With an increasing number of on-the-go business people using mobile devices, cloud-based accounting apps that allow users to access their data anytime anywhere looks like an attractive option. As attractive as these apps may seem, there are some potential drawbacks to be aware of.

Here are some of the advantages and disadvantages of using this new generation of online accounting solutions.

 

The Advantages of Cloud-Based Accounting Apps

Low Start-Up Costs: Cloud-based apps typically use a subscription model where you pay for the services monthly. This eliminates the one-time startup costs associated with purchasing in-house software.

Flexibility/Scalability: Because all the data is maintained and updated in the cloud, there is virtually no limit to the number of users and amount of data that can be stored. However, some services will charge more for an upgraded plan.

Real Time Integration/Reporting: Many of the latest cloud-based accounting apps offer the ability to integrate hundreds of third party apps so you can accomplish virtually any accounting or payroll task using one simple interface and update the data in real time.

 

The Disadvantages of Cloud-Based Accounting Apps

Potentially Higher Cost Over Time: Purchasing an in-house accounting software program might involve a one-time investment, but the advantage is that you have a piece of software that is paid for. By contrast, a cloud-based app will require an ongoing monthly fee for you to continue to access your data, which could cost you more in the long run.

Who Owns/Controls the Data: When you have QuickBooks on the computers in your office, it is pretty clear that you control the software and the data that is on it. With a cloud-based app, this issue becomes a little murky. All your data is kept in a cloud, and as long as you pay the subscription fee, you can access it. However, what if you miss a payment or two because of some glitch that was not your fault? How long will they continue to store your data and can you really afford to lose it?

Security: A major issue with cloud-based apps is always security. Hackers are getting more sophisticated by the day, and it seems we are always hearing about another major corporation that suffered from a security breach. Businesses who choose a new generation cloud-based accounting app should ask for a detailed explanation of what the company does to secure their data.

Will the Provider be in Business in Five Years: Perhaps the biggest concern with all the new apps popping up to do online accounting is the stability of the company providing them. With your most important company information on the line, you will want to know how long they have been in business and do some due diligence about the company and their prospects of survival.

Intuit, the creator of QuickBooks, has been providing electronic accounting solutions since 1983. This is a primary reason why most accounting firms recommend QuickBooks rather than one of the latest alternatives to hit the market. QuickBooks Online (QBO) is a cloud-based version of their software that gives users all the advantages of a mobile accounting app from a stable company that puts a high priority on security. For businesses looking into a cloud-based accounting app, we recommend sticking with a name that has been trusted in the accounting world for three decades. For more information about what software would be the best fit for your business, speak to your small business accountant.